Oasis Midstream Partners LP Announces Second Quarter 2021 Results, Increases Distribution and Updates Outlook

Rhea-AI Summary

On August 3, 2021, Oasis Midstream Partners LP (OMP) reported strong Q2 2021 results, exceeding volume guidance and increasing its cash distribution by $0.01 to $0.56/unit. Key figures include net income of $35.2MM, adjusted EBITDA of $55.8MM, and distributable cash flow of $43.0MM with a coverage of 1.6x. OMP announced new projects in the City of Williston and expanded third-party services in the Permian Basin, aligning with its strategic growth plans. Capital expenditures for 2021 are projected between $73MM to $78MM, reflecting increased investments to support these developments.

Positive

• Increased cash distribution to $0.56/unit ($2.24/unit annualized).
• Net income of $35.2MM and adjusted EBITDA of $55.8MM exceeded guidance.
• Distributable Cash Flow (DCF) of $43.0MM with a coverage ratio of 1.6x.
• Commenced crude oil and water services to third-party producer in the Permian Basin.
• New projects expected to drive significant EBITDA growth in 2023.

Negative

• Planned gas plant turnaround expected to reduce Q4 2021 EBITDA by approximately $6MM.
• CapEx for 2021 revised upwards to $73MM - $78MM from prior guidance.

HOUSTON, Aug. 3, 2021 /PRNewswire/ -- Oasis Midstream Partners LP (NASDAQ: OMP) ("OMP" or the "Partnership") today announced financial and operating results for the second quarter of 2021, declared its second quarter 2021 distribution, and updated its outlook.

2Q21 Operational and Financial Highlights:

• Exceeded volumes guidance across almost all DevCos and commodities;
• Increased cash distribution by $0.01/unit, declaring a distribution of $0.56/unit ($2.24/unit annualized);
• Net income was $35.2MM and net cash from operating activities was $58.6MM;
• Adjusted EBITDA⁽¹⁾ of $55.8MM was above high-end of guidance ($52MM-$55MM);
• Distributable Cash Flow⁽¹⁾ ("DCF") was $43.0MM. DCF coverage of 1.6x exceeded guidance of 1.3x;
• Free Cash Flow⁽¹⁾ was $5.1MM;
• Commenced crude oil and water services to third-party producer in the Permian Basin following Oasis Petroleum's divestiture of its Permian Basin E&P assets;
• Received acreage dedication from Oasis Petroleum in the City of Williston project area;
• Recently expanded third-party business in the Permian Basin, expanding opportunity set with pipeline to Wink;
• ESG focus capturing approximately 99% of Oasis Petroleum's gas volumes in Wild Basin.

(1) Non-GAAP measure. See "Non-GAAP Financial Measures" below for definitions of all non-GAAP measures included herein and reconciliations to the most directly comparable financial measures under United States generally accepted accounting principles ("GAAP").

Chief Executive Officer, Taylor Reid, commented, "Oasis Midstream Partners had an impressive second quarter as continued strong operational performance and cost control supported profitability and led the Partnership to exceed expectations. Additionally, OMP announced two major projects including City of Williston in the Bakken and a pipeline connection to Wink in the Delaware. These projects have compelling underlying economics which support strong EBITDA growth while increasing OMP's footprint for additional third-party opportunities. Congratulations to the team for their exceptional efforts and continued success."     

City of Williston Project Dedication

Oasis Petroleum has approved a dedication to OMP for the City of Williston project area, which includes services for crude oil, natural gas, and produced water. The City of Williston is one of Oasis Petroleum's top operating areas and is located in close proximity to Oasis Petroleum's Indian Hills project area. Volumes under each services offering are expected to flow as soon as late 2022, driving significant EBITDA contribution in 2023. OMP has identified numerous third party opportunities in the area that could further enhance overall project economics. 

OMP expects capital expenditures ("CapEx") for City of Williston to range between $4MM and $6MM for 2021, as the Partnership begins capturing right-of-way, and to range between $37MM and $43MM for 2022. OMP expects to achieve an attractive build multiple on these assets and anticipates the project, along with other developments noted below, will support solid year-over-year EBITDA growth in 2023.

Operational and Financial Update

The following table presents select operational and financial data for the period presented:

	2Q21
	(In millions)
Bighorn DevCo
Operating income	$	15.3
Depreciation and amortization	2.6
Total CapEx	0.5
Bobcat DevCo
Operating income	$	22.5
Depreciation and amortization	4.2
Total CapEx	9.0
Beartooth DevCo
Operating income	$	8.3
Depreciation and amortization	2.3
Total CapEx	—
Panther DevCo
Operating income	$	1.4
Depreciation and amortization	0.2
Total CapEx	3.7
Total OMP
DevCo operating income	$	47.5
Public company expenses	1.1
Partnership operating income	46.4
Depreciation and amortization	9.4
Equity-based compensation expense	—
Capitalized interest	—
Maintenance CapEx	2.1
Expansion CapEx	11.1
Total CapEx	13.2

 

Updated Outlook

• 2021
• 3Q21 EBITDA is expected to range between $56MM – $59MM, with the increase over 2Q21 driven by volumes from well completions in Wild Basin and the Permian Basin that occurred late in 2Q21;
• 4Q21 EBITDA is expected to decrease from 3Q21 levels by approximately $6MM, reflecting a planned gas plant turnaround at the Partnership's 200 MMscfpd gas plant in Wild Basin;
• FY2021 EBITDA guidance range of $218MM - $224MM includes the impact from the gas plant turnaround. Excluding the gas plant turnaround, midpoint EBITDA guidance would have been approximately $1MM higher than prior guidance;
• Distribution coverage is expected to approximate 1.4x in 3Q21;
• As expected with Oasis Petroleum's announcement of the acquisition of assets in the Williston Basin, Oasis Petroleum will be directing incremental activity on the Williston Basin assets in Beartooth DevCo, Indian Hills and in the newly dedicated City of Williston project area. Additionally, OMP is investing capital to third-party business in the Permian Basin, including incremental activity to support the buyer of Oasis Petroleum's Permian Basin E&P assets and to build a crude line to Wink for a separate third-party customer. As a result of this additional activity, FY2021 CapEx is now expected to be $73MM - $78MM versus prior guidance of $53MM – $58MM;
• 3Q21 CapEx is expected to be $22MM – $27MM;
• 2021 maintenance CapEx as a percent of EBITDA is expected to range between 7% – 8% with 2H21 approximating 12%, which includes capital for the planned gas plant turnaround.
• 2022 and 2023
• OMP is investing across its Williston Basin position in anticipation of future activity. Primary areas of focus include South Nesson (dedicated in February 2021), City of Williston (dedicated in July 2021), Painted Woods (OMP has ROFR), Indian Hills, Alger, Wild Basin, as well as third-party areas.
• Additionally, OMP is investing in the Permian Basin given an acceleration of activity from its anchor customer and growing third-party business.
• 2022E EBITDA is expected to increase high-single-digits versus 2021, as the South Nesson project area volumes come online in 2022. 1Q22 EBITDA should be the lowest of the year and highest in 4Q22.
• OMP expects to increase its capital spend in 2022 versus 2021, as the Partnership invests capital in South Nesson, Indian Hills, City of Williston, and the Permian Basin areas, which is expected to drive mid-teens growth in 2023.

The following table presents throughput volumes for the second quarter of 2021, as well as updated guidance for the third quarter of 2021 and full-year 2021:

		Metric		2Q21 Actual		3Q21 Guidance		FY21 Guidance
Bighorn DevCo
Crude oil service volumes		MBopd		25.6		25 - 27		25 - 26
Natural gas service volumes		MMscfpd		191.5		185 - 195		183 - 188
Bobcat DevCo
Crude oil service volumes		MBopd		17.9		20 - 23		19 - 20
Natural gas service volumes		MMscfpd		232.8		230 - 237		228 - 232
Water service volumes		MBowpd		41.5		37 - 39		38 - 39
Beartooth DevCo
Water service volumes		MBowpd		84.9		73 - 80		76 - 80
Panther DevCo
Crude oil service volumes		MBopd		9.4		18 - 23		12 - 15
Water service volumes		MBowpd		29.7		27 - 30		27 - 29

 

Liquidity

As of June 30, 2021, the Partnership had cash and cash equivalents of $9.7MM and $213.0MM of borrowings outstanding and $5.5MM of outstanding letters of credit under its revolving credit facility (the "Revolving Credit Facility). As of June 30, 2021, the aggregate commitments under the Revolving Credit Facility were $450.0MM, and the Partnership had an unused borrowing capacity of $231.5MM. 

Quarterly Distribution

On August 3, 2021, the board of directors of OMP GP LLC (the "General Partner") declared the quarterly cash distribution for the second quarter of 2021 of $0.56 per unit, payable on August 27, 2021 to unitholders of record as of August 16, 2021.

Qualified Notice

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Conference Call Information

Investors, analysts and other interested parties are invited to listen to the webcast and call:

Date:		Wednesday, August 4, 2021
Time:		10:00 a.m. Central Time
Live Webcast:		https://www.webcaster4.com/Webcast/Page/1777/42273
Website:		www.oasismidstream.com

Sell-side analysts wishing to ask a question may use the following dial-in:

Dial-in:		888-317-6003
Intl. Dial in:		412-317-6061
Conference ID:		1763540

A recording of the conference call will be available beginning at 12:00p.m. Central Time on the day of the call and will be available until Wednesday, August 11, 2021 by dialing:

Replay dial-in:		877-344-7529
Intl. replay:		412-317-0088
Replay code:		10159035

The conference call will also be available for replay for approximately 30 days at www.oasismidstream.com.

Contact:

Oasis Midstream Partners LP

Bob Bakanauskas, (281) 404-9600

Director, Investor Relations

Forward-Looking Statements

This press release contains forward-looking statements. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Partnership, including the Partnership's capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Partnership based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, developments in the global economy, particularly the public health crisis related to the novel coronavirus 2019 ("COVID-19") pandemic and the adverse impact thereof on demand for crude oil and natural gas and our customers' demand for our services. Because considerable uncertainty exists with respect to the future pace and extent of a global economic recovery from the effects of the COVID-19 pandemic, we cannot predict whether or when economic activities will return to normalized levels.

Any forward-looking statement speaks only as of the date on which such statement is made and the Partnership undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Oasis Midstream Partners LP

Oasis Midstream Partners LP is a leading fee-based master limited partnership formed by its sponsor, Oasis Petroleum Inc., to own, develop, operate and acquire a diversified portfolio of midstream assets in North America that are integral to the crude oil and natural gas operations of Oasis Petroleum Inc. and are strategically positioned to capture volumes from other producers. For more information, please visit the Partnership's website at www.oasismidstream.com.

 

OASIS MIDSTREAM PARTNERS LP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	June 30, 2021				December 31, 2020
	(In thousands, except unit data)
ASSETS
Current assets
Cash and cash equivalents	$	9,711			$	5,147
Accounts receivable	3,434				4,295
Accounts receivable – Oasis Petroleum	84,179				66,283
Inventory	5,878				6,986
Prepaid expenses	2,277				3,695
Other current assets	140				649
Total current assets	105,619				87,055
Property, plant and equipment	1,194,224				1,180,819
Less: accumulated depreciation, amortization and impairment	(259,214)				(240,877)
Total property, plant and equipment, net	935,010				939,942
Operating lease right-of-use assets	1,161				1,643
Other assets	3,315				2,053
Total assets	$	1,045,105			$	1,030,693
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	1,148			$	2,226
Accounts payable – Oasis Petroleum	30,308				28,074
Accrued liabilities	26,947				17,931
Accrued interest payable	9,518				360
Current operating lease liabilities	963				945
Other current liabilities	471				471
Total current liabilities	69,355				50,007
Long-term debt	653,387				450,000
Asset retirement obligations	808				774
Operating lease liabilities	247				733
Other liabilities	5,285				5,521
Total liabilities	729,082				507,035
Equity
Limited partners
Common units (48,627,680 and 20,061,366 issued and outstanding at June 30, 2021 and December 31, 2020, respectively)	316,023				193,536
Subordinated units (None and 13,750,000 units issued and outstanding at June 30, 2021 and December 31, 2020, respectively)	—				44,030
General Partner	—				1,027
Total partners' equity	316,023				238,593
Non-controlling interests	—				285,065
Total equity	316,023				523,658
Total liabilities and equity	$	1,045,105			$	1,030,693

 

 

OASIS MIDSTREAM PARTNERS LP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	(In thousands, except per unit data)
Revenues
Midstream services – Oasis Petroleum	$	65,064			$	56,946			$	132,227			$	138,939
Midstream services – third parties	1,188				5,242				2,088				9,088
Product sales – Oasis Petroleum	28,992				3,869				61,273				24,657
Product sales – third parties	12				6				41				6
Total revenues	95,256				66,063				195,629				172,690
Operating expenses
Costs of product sales	19,152				2,215				41,928				10,647
Operating and maintenance	12,220				14,508				25,326				31,348
Depreciation and amortization	9,416				11,881				18,401				22,078
Impairment	2				216				2				101,983
General and administrative	8,082				9,286				16,532				17,737
Total operating expenses	48,872				38,106				102,189				183,793
Operating income (loss)	46,384				27,957				93,440				(11,103)
Other expenses
Interest expense, net of capitalized interest	(11,230)				(5,186)				(15,291)				(35,443)
Other expense	—				(101)				(69)				(143)
Total other expense, net	(11,230)				(5,287)				(15,360)				(35,586)
Net income (loss)	35,154				22,670				78,080				(46,689)
Less: Net income attributable to non-controlling interests	—				10,796				17,025				12,836
Net income (loss) attributable to Oasis Midstream Partners LP	35,154				11,874				61,055				(59,525)
Less: Net income attributable to General Partner	—				1,027				—				2,034
Net income (loss) attributable to limited partners	$	35,154			$	10,847			$	61,055			$	(61,559)
Earnings (loss) per limited partner unit
Common units – basic	$	0.72			$	0.32			$	1.45			$	(1.82)
Common units – diluted	0.72				0.32				1.45				(1.82)
Weighted average number of limited partner units outstanding
Common units – basic	48,611				20,045				35,407				20,043
Common units – diluted	48,620				20,045				35,416				20,043

 

Non-GAAP Financial Measures

Cash Interest, Adjusted EBITDA, DCF and FCF are supplemental non-GAAP financial measures that are used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. These non-GAAP financial measures should not be considered in isolation or as a substitute for interest expense, net income, operating income, net cash provided by operating activities or any other measures prepared under GAAP. Because Cash Interest, Adjusted EBITDA, DCF and FCF exclude some but not all items that affect interest expense, net income and net cash provided by operating activities and may vary among companies, the amounts presented may not be comparable to similar metrics of other companies.

Cash Interest

Cash Interest is defined as interest expense plus capitalized interest less amortization of deferred financing costs included in interest expense. Cash Interest is not a measure of interest expense as determined by GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Partnership's debt, excluding non-cash amortization, and the Partnership's ability to maintain compliance with its debt covenants.

The following table presents a reconciliation of the GAAP financial measure of interest expense, net of capitalized interest, to the non-GAAP financial measure of Cash Interest for the periods presented:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	(In thousands)
Interest expense, net of capitalized interest	$	11,230			$	5,186			$	15,291			$	35,443
Capitalized interest	—				68				—				317
Amortization of deferred financing costs	(472)				(271)				(1,805)				(541)
Cash Interest	$	10,758			$	4,983			$	13,486			$	35,218
Less: Cash Interest attributable to non-controlling interests(1)	—				(3)				(3)				(6)
Cash Interest attributable to Oasis Midstream Partners LP	$	10,758			$	4,980			$	13,483			$	35,212

__________________

(1)	Prior to the closing of the Simplification on March 30, 2021.

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. The Partnership defines Adjusted EBITDA as earnings before interest expense (net of capitalized interest), income taxes, depreciation, amortization, equity-based compensation expenses and other similar non-cash adjustments. Adjusted EBITDA should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of Adjusted EBITDA provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and its ability to generate cash from its business operations without regard to its financing methods or capital structure, coupled with the Partnership's ability to maintain compliance with its debt covenants. The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities.

Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF")

DCF and FCF are supplemental non-GAAP financial measures that are used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. The Partnership defines DCF as Adjusted EBITDA attributable to the Partnership less Cash Interest attributable to the Partnership and maintenance capital expenditures attributable to the Partnership. The Partnership defines FCF as DCF less expansion capital expenditures attributable to the Partnership and unitholder distributions. DCF and FCF should not be considered alternatives to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of DCF and FCF provide information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and ability to generate cash from its business operations without regard to its financing methods or capital structure, coupled with the Partnerships ability to make distributions to its unitholders. The GAAP measures most directly comparable to DCF and FCF are net income (loss) and net cash provided by (used in) operating activities.

The following table presents reconciliations of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA, DCF and FCF for the periods presented:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	(In thousands)
Net income (loss)	$	35,154			$	22,670			$	78,080			$	(46,689)
Depreciation and amortization	9,416				11,881				18,401				22,078
Impairment	2				216				2				101,983
Equity-based compensation expenses	16				67				503				133
Interest expense, net of capitalized interest	11,230				5,186				15,291				35,443
Adjusted EBITDA	$	55,818			$	40,020			$	112,277			$	112,948
Less: Adjusted EBITDA attributable to non-controlling interests(1)	—				14,208				20,572				40,746
Adjusted EBITDA attributable to Oasis Midstream Partners LP	$	55,818			$	25,812			$	91,705			$	72,202
Cash interest attributable to Oasis Midstream Partners LP	10,758				4,980				13,483				35,212
Maintenance capital expenditures attributable to Oasis Midstream Partners LP	2,109				460				2,283				1,893
Distributable Cash Flow	$	42,951			$	20,372			$	75,939			$	35,097
Expansion capital expenditures attributable to Oasis Midstream Partners LP	11,112				1,748				242,426				17,314
LP distributions	26,745				18,258				45,012				36,516
GP distributions	—				1,027				1,027				2,034
Free Cash Flow	$	5,094			$	(661)			$	(212,526)			$	(20,767)
Net cash provided by operating activities	$	58,617			$	51,479			$	98,058			$	113,145
Interest expense, net of capitalized interest	11,230				5,186				15,291				35,443
Changes in working capital	(13,571)				(16,375)				718				(35,099)
Other non-cash adjustments	(458)				(270)				(1,790)				(541)
Adjusted EBITDA	$	55,818			$	40,020			$	112,277			$	112,948
Less: Adjusted EBITDA attributable to non-controlling interests(1)	—				14,208				20,572				40,746
Adjusted EBITDA attributable to Oasis Midstream Partners LP	$	55,818			$	25,812			$	91,705			$	72,202
Cash interest attributable to Oasis Midstream Partners LP	10,758				4,980				13,483				35,212
Maintenance capital expenditures attributable to Oasis Midstream Partners LP	2,109				460				2,283				1,893
Distributable Cash Flow	$	42,951			$	20,372			$	75,939			$	35,097
Expansion capital expenditures attributable to Oasis Midstream Partners LP	11,112				1,748				242,426				17,314
LP distributions	26,745				18,258				45,012				36,516
GP distributions	—				1,027				1,027				2,034
Free Cash Flow	$	5,094			$	(661)			$	(212,526)			$	(20,767)
Distributions declared
Limited partners	$	27,232			$	18,258			$	53,977			$	36,516
Incentive distribution rights	—				1,027				—				2,054
Total distributions	$	27,232			$	19,285			$	53,977			$	38,570
DCF coverage ratio	1.6		x		1.1		x		1.4		x		0.9		x

__________________

(1)Prior to the closing of the Simplification on March 30, 2021.

 

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SOURCE Oasis Midstream Partners LP

FAQ

What were Oasis Midstream Partners' Q2 2021 financial highlights?

Oasis Midstream Partners reported net income of $35.2MM, adjusted EBITDA of $55.8MM, and a distributable cash flow of $43.0MM.

What is the new distribution declared by Oasis Midstream Partners for Q2 2021?

The cash distribution for Q2 2021 is $0.56 per unit, an increase of $0.01 from the previous quarter.

What projects did Oasis Midstream Partners announce in August 2021?

OMP announced the City of Williston project and expanded third-party services in the Permian Basin.

What are the expectations for Oasis Midstream Partners' capital expenditures in 2021?

CapEx for 2021 is projected to be between $73MM and $78MM.

How did Oasis Midstream Partners perform in Q2 2021 compared to its guidance?

OMP exceeded volume guidance across almost all Development Companies and commodities, with adjusted EBITDA above the high-end of guidance.